Cash out refinance on commercial property

[Chetan Patil]

Hello all,

I am looking into purchasing a small commercial property with a CAP rate of ~10% at a purchase price of $375,000. I wanted to understand how cash out refinance works for such properties. I am considering buying with cash (borrowed) and then refinance almost immediately.

Assuming I can providing them the rent rolls etc. will the appraisal and the refinance amount be mostly close to $375,000 given that it was a recent purchase and there have been no major upgrades to the property or will they actually use an appropriate GRM and other factors (like neighborhood) that could potentially value the property much higher and I might be able to pull majority of the cash out?

Also, what is the earliest I can refinance after purchase?

[Stephanie P.]

@Chetan Patil

6 months is going to be your shortest seasoning period I've seen and you'll really have to have an aggressive lender (not a whole lot of them in this space right now) to use an appraised value that's significantly higher than the purchase price.